The End to a Moratorium?

February 14, 2011
By
Riordan Frost, Policy Associate

More than 16 years ago, Minnesota policy makers declared that more nuclear power plants would be bad for the state’s environment and banned new construction of plants. Now, legislators say economics and energy uncertainty call for repealing that nuclear ban. But a well respected economist says don’t buy the economics argument. Constructing new nuclear plants could actually wind up costing ratepayers more.

Before we get into those arguments, let’s look at the moratorium’s background.

Minnesota currently has three nuclear reactors at two sites. One reactor is located in Monticello, and the other two are located on Prairie Island near Red Wing. These three reactors currently provide almost 24% of Minnesota's electricity. The moratorium on building any new nuclear reactors was put in place in 1994, primarily for environmental reasons.

As MPR reports, the moratorium was part of the deal that allowed Xcel Energy to store nuclear waste above ground at Prairie Island. The storage of nuclear waste is the major sticking point for nuclear power, especially since the U.S. Department of Energy has cancelled the plans to store the country's nuclear waste in Yucca Mountain in Nevada. In January of 2010, the U.S. Department of Energy created the 'Blue Ribbon Commission on America’s Nuclear Future' to study nuclear waste storage solutions. Their interim report is expected by July 2011, with a final report by January 2012, according to the commission's press release.

Though Minnesota originally enacted a moratorium for environmental reasons, its proposed repeal is based on economics. It's one of the first pieces of legislation making its way through the new state legislature (fyi: it's SF4, HF9). The senate version passed the first week of February, and the legislation also passed the House Commerce Committee. It is expected to pass the Republican-controlled House, but Governor Dayton may yet veto it.

At the repeal's House Commerce Committee hearing, State Representative Joyce Peppin (R-Rogers) argued that the moratorium should be lifted for Minnesota's future energy needs. Peppin, the bill’s House author, believes Minnesota will need a new source of base-load energy in the future, because renewables are not reliable enough: "The sun does not always shine, and the wind does not always blow."

Those testifying for the repeal touted the benefits of more nuclear plant construction. They included utility investors, PaR Nuclear (part of Westinghouse), the Minneapolis building trades, and the MN Chamber of Commerce. A conversation about more nuclear power could only start after the moratorium is lifted, they argued.

Repeal opponents offered both environmental and economic reasons for keeping the moratorium. Dr. Mark Cooper, a senior fellow for economic analysis at Vermont Law School offered the most thorough testimony against repeal.

Dr. Cooper’s argument for keeping the moratorium in place was entirely economic. He cited the enormous costs of building a nuclear reactor—a two-unit reactor can cost upwards of $20 billion—and argued that these costs are usually placed on the ratepayers, as well as the taxpayers, through government subsidies.

Cooper argued that the conversation about additional nuclear reactors is already taking place, and that removing the moratorium would actually tilt the playing field, because nuclear plants take up so much attention and investment. As Cooper put it, "I cannot predict when, if ever, nuclear reactors will become economically competitive, but I can say with a great deal of confidence that they are not economically rational today and that Minnesota has alternatives available to it that are preferable and capable of meeting its needs for electricity, even in a carbon-constrained environment."

Lending credence to Cooper's arguments is the fact that no utilities in Minnesota have set forth any plans for a new nuclear plant for the next 15 years. Noting that reactors can take up to ten years to construct, there is no strong job creation argument behind the repeal. The reasoning lies in the predicted future energy need of Minnesota (there is no current energy demand, as the Star Tribune reports) and the view that renewable energy simply cannot meet our needs. As Peppin argued, Minnesota needs a new 'base-load' source of energy in the future. When we talked to Dr. Cooper about this he told us, "Base-load is getting fuzzy. If you combine wind and solar with gas, you have reliable energy." He also pointed out that renewable energy will likely see technological strides in the next 15 years, making those types of energy much more viable.

As one of the supporters stated, every type of energy has positives and negatives, which is true. When the subsidies that nuclear plants require were brought up, wind and solar subsidies were mentioned to justify those subsidies. The difference is the cleanliness of those energies. Though industries have worked very hard to pitch coal and nuclear as 'clean' in various ways, the fact remains that coal plants produce harmful emissions and nuclear plants produce hazardous waste.

Still, nuclear and coal are Minnesota's biggest sources of energy. The question we need to ask ourselves is what we want our energy future to be, not just how we can provide for our future with current major power sources. Though the arguments around this repeal are economic, the environmental questions of waste storage persist for nuclear energy, and should not be ignored.